credit & debt

How to Opt Out of Forced Arbitration

Some Chase credit card holders will have a binding arbitration clause added to their card agreement. Here's what you need to know.

Heads up, Chase credit card customers: The issuer is adding a binding arbitration agreement to nearly all of its cards (excluding the AARP card)—but you still have time to opt out. Chase will soon bar cardholders from banding together in a class-action lawsuit against the company. Customers will have to settle disputes through arbitration—in which a third party privately makes a judgment—or in small-claims court. But if you send Chase a letter by the date specified in the notice you receive outlining the changes (dates vary and are in early August), you can preserve your right to join a class action.

Write a clear statement rejecting the arbitration agreement, and request a letter of acknowledgment from Chase. Include your name, account number, address and signature, too. Send the letter by certified mail (so that you can prove Chase received it) to P.O. Box 15298, Wilmington, DE 19850-5298. Customers who open a Chase card after the deadline can decline the arbitration clause, too.

About two-thirds of 30 large card issuers include mandatory arbitration in their agreements, according to CreditCards.com. Nearly half of those issuers let customers opt out by sending a letter within a month or two of opening the account, and all but two allow you to take an individual case to small-claims court.

Bank of America and Capital One are among large issuers that don’t require arbitration. But more issuers may start imposing it. In a settlement several years ago, some issuers—including Bank of America, Capital One and Chase—entered a moratorium on arbitration clauses, which has since expired, says Myriam Gilles, professor of law at Yeshiva University’s Benjamin N. Cardozo School of Law.

The ability to opt out of arbitration may not be as meaningful as it appears. Most customers won’t act on it, so “it’s more a way to soften the public-relations blow” for the company, says Lauren Saunders, associate director of the National Consumer Law Center. Plus, says Gilles, attorneys would be hard-pressed to pull together a class action with the consumers who do opt out.

TAKE OUR QUIZ: Will It Sink Your Credit Score?

Most Popular

What Are the Income Tax Brackets for 2022 vs. 2021?
tax brackets

What Are the Income Tax Brackets for 2022 vs. 2021?

Depending on your taxable income, you can end up in one of seven different federal income tax brackets – each with its own marginal tax rate.
September 20, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
19 Best Stocks to Buy Now for High Upside Potential
stocks

19 Best Stocks to Buy Now for High Upside Potential

Finding the best stocks to buy when the market is selling off can be daunting, but the pros believe these 19 top-rated names are poised for big return…
September 23, 2022

Recommended

The Best Travel Rewards Credit Cards for You
credit cards

The Best Travel Rewards Credit Cards for You

Business road warriors and leisure travelers alike can use a travel reward card to turn miles logged into other things – including more travel.
September 24, 2022
How Much Does Amazon Prime Cost (And Is It Worth It?)
Amazon Prime

How Much Does Amazon Prime Cost (And Is It Worth It?)

Plenty of prices are higher in 2022 and membership in Amazon Prime (up 17%) is no exception. Are you still getting your money’s worth? We’ll test the …
September 22, 2022
What Is an APR?
credit & debt

What Is an APR?

Even for those who pay off their credit card balances every month, knowing your APR is part of keeping good credit habits.
September 21, 2022
What to Do If Your Credit Card Is Closed
Making Your Money Last

What to Do If Your Credit Card Is Closed

The issuer may restore your account with the previous terms, or it may request that you reapply for the card.
September 20, 2022